About Piponomics

Economics plays a huge role in the foreign exchange market. I enjoy looking at economic trends and trying to see how it may affect currencies, and life in general. I will post my thoughts and observations here. I'm throwing macroeconomics, forex trading, pop culture, and everyday life into a pot and hopefully the final product are lessons about the FX market that's easy to understand.

Make Moolah Playing the Comdollahs!

Australian Retail Sales

The first one coming up is the Australian retail sales report just after the clock strikes midnight at 12:30 am GMT. Expectations are that consumer spending will continue its uptrend by posting 0.4% growth for the month of March. If it comes in better than expected, it would mark the fourth consecutive month of retail sales growth.

I find this forecast highly encouraging. After all, who would have thought that sales would keep rising after the floods that hit Australia earlier this year?

Interestingly, the market reaction to the last three reports has been somewhat muted. While all of them came in as expected or even better, I bet traders who have tried trading the news have been disappointed. Why? Because AUD/USD barely moved upon the releases! This is somewhat surprising because last year’s retail sales reports normally generated pretty nice moves.

So how can you play this report?

The Aussie dollar is trading at all-time highs right now, testing the 1.0300 handle over the past couple of days. If you were on the fence on whether to go long Aussie or not, wait for tomorrow’s release. If the report comes in exceedingly higher than 0.4%, AUD/USD might just make a clean break above the psychological resistance level!

National Bank of New Zealand (NBNZ) Business Confidence

Up next at 2:00 am GMT are the results of the NBNZ’s latest business confidence survey. The tier-1 report is expected to spark the same reaction as Rebecca Black’s acoustic rendition of “Friday”–traders know it will be bad.

This is because the figure will take into account the impacts on sentiment of the earthquake in Christchurch and also the calamities in Japan. And so, most market junkies aren’t expecting the reading for March to come in higher than the 34.5 figure we saw for February.

At the same time, hotshots believe the NBNZ are keeping their hopes up that activity expectations won’t print below the historical average of 26.0. After all, reconstruction efforts in both places hit by the earthquakes are expected to boost economic activity. On top of that, the Rugby World Cup is also anticipated to bring in some moolah to New Zealanders too!

With that said, we may see a repeat of NZD/USD‘s price action in December when the business confidence index came in lower at 29.9 than its previous reading of 33.2. The pair fell from its intraday high of .7406 to .7344 then bounced back enough for the Kiwi to end the day with a win. Make sure you go through the report first and don’t be fooled by a low reading. Ayt?

Canadian GDP

Last but certainly not least, we have Canada’s January GDP data coming out at 1:30 pm GMT. Survey says we’ll probably see a repeat of December’s 0.5% expansion, but if you ask me, there’s a chance we’ll see a softer figure than forecast!

Yes, it’s true that the last three GDP releases have shown growth steadily accelerate from 0.2% to 0.5% from October to December 2010. But you also have to take into consideration what drove growth during these months–exports.

Unfortunately, the stellar exports performance that drove growth in late 2010 didn’t carry over to 2011. January only witnessed a 0.8% rise following the record-breaking 7.9% increase in December. Without a strong exports performance, it will be difficult for January’s GDP to match December’s growth.

Now, even though Canada’s GDP report is published more frequently that other countries’, it still packs plenty of punch on the charts. As a matter of fact, it’s not uncommon to see USD/CAD quickly move 50 pips in one direction in the hour of its release. So if you’re looking for some quick action, this might be right up yo’ alley!